Why Lebanon's retailers are hurting this holiday season

As turmoil continues to plague the region, with the governments of Gulf Cooperation Council states still advising their nationals against travel to Lebanon, and the country still in the grips of an economic downturn, merry is not how merchants would describe this Christmas season.

Most years, the Christmas season tends to evoke images of merry shoppers going from store to store as they stock up on gifts for the holidays. But for many disheartened Lebanese merchants and businesses owners, the only images before them are those of empty stores and barren streets. As turmoil continues to plague the region, with the governments of Gulf Cooperation Council states still advising their nationals against travel to Lebanon, and the country still in the grips of an economic downturn, merry is not how merchants would describe this Christmas season according to this report in The Daily Star[2].

For yet another year, business during the holidays has proved anything but boisterous, disappointing merchants who count on the usually hectic season to make up for the lack of activity during the rest of the year.

“I don’t know for how long we will be able to sustain these bad circumstances,” says Tarek Assi, general manager of Inizio, a clothing store on Hamra Street.

Assi explains that his store relies heavily on Lebanese expatriates and Arab tourists, and their absence this year could force him out of business. “We are not even able to cover our expenses,” he says.

“We are [staying] in business for the time being by spending from our own savings,” he adds.

Assi says he has lost over 70 percent of his usual business volume and does not expect sales to pick up any time soon, even during the holiday season.

He notes that the spate of security incidents this year has also contributed to keeping Arab tourists away.

“Arabs are the ones who spend the most usually but we did not see any of them this year,” says Mustafa Jawad, owner of Tresor, another clothing shop in Hamra.

Jawad says his business saw a 70 percent drop in sales. “We used to rely on Arab tourists to increase our revenues, but this year even Lebanese expats may not be coming to Lebanon due to the bad security circumstances,” he adds “I myself told my daughter not to visit Lebanon this year.

In fact, businesses across Lebanon count heavily on tourists from the oil-rich Gulf States to stimulate the economy and inject badly needed foreign currency into the country.

Meanwhile, merchants in Mar Elias are also struggling to attract customers, but they blame the decline in business activity on fierce competition from newly opened shops in Hamra and a number of new malls that have sprung up in recent years.

“The opening of famous shops in Hamra such as H&M and others affected our work to a great extent,” says Adnan Younes, owner of Tutti Frutti clothes and accessories shop in Mar Elias.

Younes says that in the past he used make 70 percent profit from total sales, but today “customers do not understand that I have already cut my prices, they still complain.”

Younes adds that he has been in this business for more than 10 years but the past two years have been the worst yet.

He says that in addition to the deteriorating security situation, shopping malls have also affected his business to a great extent.

In fact, Christmas appears to be a bit more festive this year at popular malls such as ABC in Ashrafieh.

Jean Kassis, deputy store Manager at ABC department store, says the volume of sales this year has not seen a dramatic change.

“It is only dropped by 2 or 3 percent, not more,” he adds. “It is a festive season and people still have to buy Christmas gifts, but maybe at lower budgets.”

But he admits that foreign shoppers are nearly non-existent. “We have been suffering from a lack of tourist shoppers for over two years,” he says, adding that the mall relies mainly on Lebanese shoppers in December.

Nizar Khoury, head of the Commercial Department at Middle East Airlines[4], told The Daily Star that most of the reservations for Christmas and New Year vacations were made by Lebanese expatriates and not Arab tourists.

That claim is supported by remarks from hotels, which have witnessed a marked decline in their reservation rates for the coming holiday season.

“Ever since the civil war in Syria began, we cannot predict what our occupancy rate will be like in festive seasons such as Christmas and New Year,” says Wassim Msharrafieh, general manager of White House Suites in Hamra.

Msharrafieh says that the political and security uncertainty in Lebanon has forced tourists to avoid making reservations in advance.

“In the past tourists used to reserve ahead of time to guarantee finding vacant places at hotels, but now they make reservations only a day or two before coming.”

Msharrafieh says the occupancy rate at White House this year has dropped by over 30 percent. “It would be awesome if we could reach a 50 percent occupancy rate during this festive season,” he adds.

He notes that over the past two years most of his customers have been from Iraq. “We have been receiving a lot of Iraqis, maybe because Lebanon is considered to be a safe haven compared to what is going on in their country,” he says.

Reservations at Le Cavalier Hotel[5] in Hamra have also seen a dramatic decline, according to sales manager Ayman Nasreddine. “Last year we only had five unreserved rooms left by Dec. 10 for the Christmas and New Year period, but this year we did not yet reach 50 percent reservations for the holiday season,” he says.

“Ever since the war in Syria started, we can barely cover our expenses,” he says, adding that Cavalier will keep on running as long as it does not start incurring losses.

He says the hotel has even reduced its prices in order to attract clients. “We had to reduce our prices because five stars hotels are doing so,” he adds.

Meanwhile, car rental companies are also reeling from the economic slowdown. “We witnessed a higher demand on our services last year during this period,” says Tony Mahfouz, manager at Hala Rent a Car. “

“Our business volume this season has fallen by 30 percent compared to the same period last year,” he says, adding that demand is coming mainly from Lebanese expatriates and not tourists.

“Demand for car rentals for this Christmas season dropped to 20 percent compared to 70 percent last year,” says Mohammad Daqdouq, president of the syndicate of rental car agencies in Lebanon.

Daqdouq explains that this 20 percent demand on car rentals comes mainly from Lebanese expatriates, Jordanians and Iraqis. “Demand was slow during 2013 and it only reached 10 to 15 percent due to the absence of Arab tourists from the Gulf,” he says.

Daqdouq recalls that car rental companies last year offered around 13,000 vehicles, but the number has dropped to 8,000 this year due to a lack of demand for rentals.

“Some companies have shut down their businesses without announcing it and others have reduced the number of their cars in order to survive in the market,” he adds.